Commentary: Rick Perry's Texas lags behind on health care exchanges

In Rick Perry's Texas, nearly 1 in 3 working-age residents has no health insurance, so there's a price to pay for his pride and politics.

Count the millions of federal dollars being left on the table, because the governor refuses to begin work on a healthcare exchange. As important, count the opportunity costs -- the missed chances to create a better health insurance market for millions of Texans who need individual and small-company plans.

A frequent criticism of the 2010 healthcare law is that it forces a cookie-cutter solution on all. Not so with health exchanges, the online shopping sites envisioned as a Travelocity for health insurance.

Each state can tailor its exchange to the culture and population, and diverse approaches are already appearing. But those states that don't establish their own systems -- that's Texas at the moment -- will have to use a federal exchange.

Even conservative stalwarts like Mississippi and Utah have already taken steps to avoid the federal option.

While Perry complains about being fed-up with Washington, others are seizing the moment and the money. Thirteen states have established exchanges, tackling issues such as the makeup of governing boards, mandated benefits and which insurers to allow into the mix.

Twenty-eight states and the District of Columbia have received first-level grants to establish their programs. Federal payouts include $1.6 million to Tennessee, $21 million to Missouri and $39 million to California.

Rhode Island was the first to get to the second tier of development, earning a separate $58.5 million grant.

So far, Texas has received almost $4 million from the health law, with most of that designated for consumer assistance programs, Jennifer Tolbert of the Kaiser Family Foundation said.

"For political and practical reasons, some states don't want to move forward until they're required to," said Tolbert, director of state health reform for Kaiser. "Others are embracing the process. They're using the exchanges as an opportunity to reform and better regulate the market."

Texas could pick up a lot more money, if it cared to. That could be used for technology infrastructure, call centers and systems to integrate applications with Medicaid and other programs. There would be jobs for Web designers, analysts, communicators, consultants and state agency staffers. All would be necessary to create a Texas program from scratch.

But a Perry spokeswoman told the Houston Chronicle last week that the governor believes that the healthcare law is "unconstitutional and misguided." Therefore, Texas isn't pursuing an exchange.

Texas is one of 27 states challenging the health law, and the Supreme Court is expected to make a ruling by summer. By then, it may be too late for Texas to submit a grant before the late June deadline. If the law is upheld, Texas could be stuck with a federal exchange, at least for a while.

Federal subsidies to help low-income Americans buy insurance will be funneled through the exchanges, so they're required. Insurers are likely to clamor to get into them, too, because millions of new customers will be up for grabs.

But even if the law were overturned, shouldn't Texas be working on its own exchange? And on the feds' nickel?

This is different from many health law requirements. Most conservatives oppose the large expansion of Medicaid, the federal mandate to buy coverage and the premium rebates that insurers must pay if they spend too much on overhead.

But exchanges are a bet on free markets, rather than regulators. As tools, they can let consumers and insurers determine much of what happens in the marketplace.

Texas has been an innovator in electric deregulation, and its power-to-choose website has revolutionized the way people buy electricity here. They can easily compare plans, prices, complaint records and the share of power that comes from renewable energy. Retailers tout their service and inducements like frequent-flier miles.

If not for the politics, Texas could be a leader in developing a similar system for health insurance. In the 1990s, it created an insurance exchange for small businesses. That failed, because insurers outside the exchange offered lower-price coverage to healthy customers; in effect, that confirmed the problems of so-called adverse selection.

That's among the many issues states are thrashing out right now. Maryland, for instance, requires that insurance plans inside its exchange must also be offered outside it -- and for the same premium.

California will operate its exchange as an "active purchaser." That means the state will negotiate rates and coverage, using its size to get better deals, and then select plans to be included. California will also require those insurers to offer plans at all four coverage levels.

Utah's system is open to all comers. Any insurer that meets minimum standards can sell in Utah's exchange. More than 140 plans with varying prices, co-payments and deductibles are available, according to the Kaiser Family Foundation.

Mississippi will operate its exchange through its high-risk pool, regulated by the state Insurance Department. It has already received $21 million in federal grants.

Texas can always piggyback on another state, if necessary. Or just leave it to the feds.

But there's a better option than ignoring Washington, and most states figured that out: Do it right, do it yourself.